China Uneasy with Quantitative Easing Prospect

Chinese commentators are starting to show unease at the increasingly likely prospect that the U.S. Federal Reserve will relaunch a program of buying bonds to push down interest rates. And no wonder: Even before it has actually started, such so-called quantitative easing is complicating the nation’s continued effort to manage its currency.

A commentary Sunday by the official Xinhua news agency cast doubt on the wisdom of the whole bond-buying enterprise. “Whether it can be a silver bullet to drag American (sic) out of the slump remains unknown, analysts say. Yet it seems certain that the measure is somehow self-centered and will create considerable spill-over effects in other parts of the world,” the commentary says.

ZUMApress.com

Quantitative easing by the U.S. will cause the prices of Chinese goods abroad to rise.

“It is the dollar that triggered the currency war,” Li wrote. “Given a sluggish economy and huge amount of debts, driving the value of the dollar down is in line with America’s interests, both in short term and in long term. The international community ought to stay vigilant.”

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